After learning the necessary skills in forex trading, such as fundamental and technical analysis, the next step is to improve your profitability. Some do this by reading forex books, working on trade psychology, or developing trade systems. However, there are some other ways to improve profitability without having to use additional resources. Here are some of them:
One way to do this is to adopt correct position sizing. When starting out in trading, we are usually told to risk a constant amount per trade in order to manage risk properly. But when you want to make the most of the setups you are confident about or comfortable with, you can advance your trading performance by increasing your risk responsibly or you can scale down when you think a setup is more risky than usual. For example, taking trend setups could be your expertise so you can increase your position size in these scenarios. If the trade setup is against the trend or if you are betting on a result of an economic release, you can reduce the amount you risk on that setup.
Another way is by figuring out how to adjust your trade plan to the current market environment. Beginner traders usually take setups wherein their trade strategy is appropriate for the market sentiment, but this would prevent you from taking the valid setups even when the environment is different. In particular, when markets are in a range, you can consider looking at indicators follow ranges or hint at potential breakouts. On the other hand, when markets are in a trend, you could focus on Fibonacci re-tracement and extension levels. You should also be prepared to adjust to changes in volatility, especially during summer periods.
Lastly, do not be afraid to jump in strong moves. We often wait for re-tracements to catch big moves at cheaper prices but this sometimes keeps a trader from actually being able to take the trade at all. If you are able to figure out that the price will still pull back, you can stick to this re-tracement strategy but you should also be prepared to jump in at market if you think price will just continue in a strong direction. Taking note of past price reactions to market catalysts can be a helpful guide in determining if price usually pulls back or if it will just continue in one direction without looking back.
Keep these ideas in mind when trying to work on your trade performance as these simple tips can be crucial in maximizing your profitability.
One way to do this is to adopt correct position sizing. When starting out in trading, we are usually told to risk a constant amount per trade in order to manage risk properly. But when you want to make the most of the setups you are confident about or comfortable with, you can advance your trading performance by increasing your risk responsibly or you can scale down when you think a setup is more risky than usual. For example, taking trend setups could be your expertise so you can increase your position size in these scenarios. If the trade setup is against the trend or if you are betting on a result of an economic release, you can reduce the amount you risk on that setup.
Another way is by figuring out how to adjust your trade plan to the current market environment. Beginner traders usually take setups wherein their trade strategy is appropriate for the market sentiment, but this would prevent you from taking the valid setups even when the environment is different. In particular, when markets are in a range, you can consider looking at indicators follow ranges or hint at potential breakouts. On the other hand, when markets are in a trend, you could focus on Fibonacci re-tracement and extension levels. You should also be prepared to adjust to changes in volatility, especially during summer periods.
Lastly, do not be afraid to jump in strong moves. We often wait for re-tracements to catch big moves at cheaper prices but this sometimes keeps a trader from actually being able to take the trade at all. If you are able to figure out that the price will still pull back, you can stick to this re-tracement strategy but you should also be prepared to jump in at market if you think price will just continue in a strong direction. Taking note of past price reactions to market catalysts can be a helpful guide in determining if price usually pulls back or if it will just continue in one direction without looking back.
Keep these ideas in mind when trying to work on your trade performance as these simple tips can be crucial in maximizing your profitability.
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